Achilleas Kallakis (43), who portrayed himself as a Greek shipping tycoon when taking out loans for 16 different landmark properties over five years, is accused of using forged guarantees from a reputable Hong Kong property company to secure the monies between 2003 and 2008.

Yesterday, Donal O'Shea, who was the head of property in AIB's British corporate banking unit at the time, said it was "devastating news" that the guarantees from Sun Hung Kai Properties (SHKP) were not legitimate.

Mr Kallakis and his business partner, Alexander Williams, have pleaded not guilty to 23 charges of fraud, forgery and money laundering, among others.

They are accused of falsely claiming SHKP as their guarantor, a crucial part of the financing deal from the bank.

By 2008, the loans to Mr Kallakis resulted in a high degree of importance being attached to him by senior staff, the court heard yesterday.

"He would have been one of the bank's single biggest customers at that point," Mr O'Shea said.

However, an alert was raised in the middle of that year when German bank Helaba contacted AIB voicing concerns about reports of a previous conviction Mr Kallakis had for fraud.

AIB subsequently wrote to SHKP to check that the guarantees, which had increased the worth of the property, were valid. The Hong Kong business wrote back to say it had no knowledge of the guarantees.

Three members of AIB -- including Mr O'Shea -- then travelled to Hong Kong, where they were told the seals and notepaper on the documentation was not legitimate.

Mr O'Shea told Southwark Crown Court yesterday that the news was devastating as the guarantees had been an extremely important part of the structure of the loans. Without them, millions of pounds were written off the value of the properties, he said. Michael Cooke, who was a senior lending manager on the deals, was "absolutely astonished" when told of the revelations, Mr O'Shea said.

Staff from the London property lending team of AIB were treated to a series of trips away over the period of the loans, including to the World Cup final in Berlin and to the Monaco Grand Prix.

AIB seized the properties after the issue came to light and sold them to an Irish property company, Green Property. The bank made a loss of £56m (€64m). Mr O'Shea is now head of AIB's enterprise lending services in Dublin. The trial is due to continue today.